Welcome to ChipsMoneyTips. I’m Chip Chinery. This is how to get outta debt from a credit card – with a credit card. Specifically, a 0% balance transfer credit card.

If you are going to do this, you have to know yourself. Like you, I’m a grownup – but I can’t keep Oreos in the house. I know this about myself. If I buy a box of Oreos, that box will be gone by nightfall. All gone. Therefore, I don’t keep Oreos in the house. Period. I get my cookies on the outside.

So if you-getting-a-credit-card that stops your monthly interest just means, “Whew! Pressure’s off. Let’s go shopping!” Tough Love here: You’re an idiot. Know yourself. If a credit card is your Oreos, don’t have it in your possession. And DON’T do this deal.

Otherwise… here’s the deal:

You’re in credit card debt, apply for a 0% balance transfer credit card. Instead of getting a loan from a bank, it’s like you are getting a loan – from this credit card. You transfer the balances from all of your other high interest credit cards onto this new 0% interest credit card. And that is all you use it for. You put it away and do not charge on it – not even one box of Oreos.

Then each month – pay the minimum amount due. WAIT ChipsMoneyTips YOU ALWAYS SAY TO ALWAYS PAY A CREDIT CARD IN FULL OR DON’T GET IT. That is true. You should pay off your everyday credit card in full every month to avoid being charged interest. Because these are all everyday credit cards that you didn’t pay in full and now you pay high interest rates on them.

But in this case, this 0% balance transfer credit card is different from an everyday credit card. In this case, you have an agreement to pay 0% interest for a pre-determined number of months or years. Right now, in April 2011, there are 0% balance transfer credit cards offers for as long a term as 24 months! And all you are required to pay is the monthly minimum for those months. That is why this 0% balance transfer credit card is different from everyday credit cards.

The credit card company charges you a one-time fee of 3-5% of the balances that you transfer to this new 0% card. Still, that 3-5% fee is a heckuva lot less than the double digit interest rate you are currently paying. So you’re no longer paying 15-29% interest. Your new rate on the 0% balance transfer credit card is… 0%!!

Is it worth doing?

Let’s say you owe $10,000 on a credit card and are paying 15% interest, after one year you’ll pay about $1,600 in interest. But let’s say you transfer that $10,000 to a 0% balance transfer credit card that charges a one-time 5% fee. The fee will cost you $500, but you’ll have no additional interest for the term. That’s a savings of $1,100 a year.

Even better, if you transfer that $10,000 to a 0% balance transfer credit card with a 3% fee, the fee will cost you just $300, again with no interest for the term. A savings of $1,300 bucks a year!

Right away, you are saving a lot of money by having a 0% balance transfer credit card.

Now here’s another very important part: at the end of those pre-determined amount of months at 0% interest, you must pay the balance off – in full. You can do this with cash or possibly with another 0% balance transfer card if you haven’t saved enough cash to pay it off in full. If you don’t pay it off in full, the 0% rate will adjust to a higher rate on the remaining balance on that card. That rate is disclosed on the card application.

To avoid that headache… I suggest you figure out how much cash you will need to pay off the card when the 0% rate is due to expire. Divide that by the number of months you have the 0% balance transfer rate, and start setting aside that amount each month in a savings account that will pay you interest.

Bottom line: If you are $10K in debt and get a 0% balance transfer credit card for 24 months, All you need to do is pay down $13.70/day or just under $100/week – you’ll have that $10K paid off in 24 months.

Just like in grade school, I will show all work. $10,000 divided by 24 months, 24 months = 2 years. 2 years = 365 days x 2 = 730 days. $10,000 divided by 730 = $13.70 per day. Suddenly, $10K in debt isn’t so overwhelming.

If you are watching this at ChipsMoneyTips.com, there are links below this video that will show you where to find the best 0% balance transfer credit card offers out there, as well as some high interest savings accounts.

This is a tourniquet you can use to stop the bleeding of interest. With a little planning and discipline, you’re saving big bucks and you’re getting out of credit card debt. If you are not able to get a 0% card, fear not, I have a few more ideas.

PodCASHt: Poker’s Jamie Gold

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